DaVinci scandal now smells of fraud
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Shanghai Daily, January 11, 2012
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[By Zhou Tao/Shanghai Daily] |
There is no telling how the conflicting forces swirling around the DaVinci furniture scandal are to play out, but the latest twist is already a test of the imagination.
The luxury furniture maker suffered a heavy blow July 10, when CCTV's Weekly Quality Report program claimed that, after six months of underground investigation, it found that a brand of DaVinci furniture labeled òMade in Italyó was actually manufactured in a factory in Dongguan, Guangdong Province. These products were then shipped to Italy, then imported back to China through a Shanghai port, to acquire necessary paperwork to show importation from Italy.
In a hastily called press conference following the expose, a distraught Doris Phua, DaVinci's founder and CEO, left the scene in tears, and soon a caricature of her distorted face, titled òMona Lisa in Tears,ó began to circulate online.
The avalanche of negative reporting had so prejudiced public judgment that when the official findings came, they were little noticed.
Shanghai Customs announced in July 16 that about 3.5 percent worth of DaVinci's imported products in 2011 were originally made in China.
A top furniture insider explained that such practice (export and then import, or even òone-day stay in a Free Trade Zoneó) is legal and quite acceptable in the furniture sector.
On August 31, the Shanghai Industrial and Commercial Administrative Bureau concluded that following its investigation, all DaVinci customs declaration documents were found to be in order, and its investigation in Guangdong did not find that DaVinci had lied about where the furniture was made.
These findings did not support CCTV's blanket accusations, but DaVinci's sales slipped drastically.
During the July-October period, its sales in China dropped 85 percent compared to the same period last year.
Phua decided to fight back after seeing video clips provided by one of her Italian furniture suppliers whose product was allegedly copied by DaVinci.
In the video a CCTV reporter assigned to investigate the Italian shop was dismayed that the suspect brand of DaVinci furniture did in fact originate in Italy. But when the program was aired three months later, the reporter's chief finding about authentic origin had been edited out.
In a comprehensive coverage of the scandal, a recent issue of the Century Weekly also found that the key evidence of DaVinci's alleged falsifications, supposedly provided by the general manager of a furniture maker, was actually coaxed from a young salesperson eager to get a 22 million yuan (US$3.4 million) furniture contract offered by clients who later turned out to be CCTV reporters.
PR contract
In the wake of the expose, DaVinci was desperate to contain the crisis and signed a 3-million-yuan public relations contract with Cui Bin, general manager of the Beijing Times newspaper and the head of a PR company. Last Friday, Cui was fired as newspaper general manager for the deal.
According to the three-month contract signed on July 14, the PR firm would provide services including in-depth communication with major media outlets to minimize all the negative fallout from the scandal. This was to include arranged interviews with influential media figures.
Phua was eager to see Li Wenxue, the CCTV reporter who had directed the expose, but Cui said DaVinci first had to pay 4.5 million yuan to a dissatisfied consumer who had filed a suit against the company. Earlier the consumer threatened to bring down DaVinci, saying he knew powerful media figures.
Then Phua saw Li, and later, under Cui's direction, sent 1 million yuan to an account in Hong Kong, said to be Li's.
On December 9, DaVinci accused Li of fabricating reports by holding back key information, and using his official capacity to blackmail the company in collusion with the consumer in question and Cui.
In addition to blackmail, Phua also accused Li of attempting to take over a DaVinci outlet in Hangzhou. Li allegedly proposed to rename the outlet Fendaqi, (a jumbled read of DaVinci in Chinese).
According to a recent issue of the Century Weekly, in its crisis management blitz, DaVinci had already paid 14.5 million yuan in total.
Li can easily issue denial after denial, but at a time when media prestige is in tatters, how to make his denials sound plausible can be a challenge.
And in the cyber age, a six-month drama is long enough. Everybody is expecting a kind of climax, or denouement.
The outcome will not only be subject to the deliberations of China?s law enforcement. There are strong interests to pay attention to.
That will decide if criminal investigations will be undertaken against people like Cui.
It may be too early to gauge the true quality of DaVinci furniture, but as a newsmaker DaVinci is unrivaled.
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